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Question 24 Chapter 3 of Class 12 Part – 1 Usha Publication
24. (Calculation of Super Profits and Average Profits when Goodwill and Total Assets are given) Ludhiana Garments has total assets (excluding goodwill) of ₹ 1,87,500, including cash of ₹ 12,500. The Capital account of partners X and Y showed a balance of ₹ 1,20,000 and the balance was reserves. Normal rate of return was 10% and the goodwill was valued ₹ 60,000 at four year’s purchase of super profits. Find out average profits of the firm.
| Goodwill | = | Super Profits x Number of years’ purchase |
| Super Profit | = | Goodwill |
| No. of year purchases | ||
| = | 60,000 | |
| 4 | ||
| = | 15,000 | |
| Super Profit | = | Average - Normal Profit |
| Average Profit | = | Super Profit + Normal Profit |
| = | 15,000 + 18,750 | |
| = | 33,750 |
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Accounting & Commerce Educator
Sarbjit Singh holds a B.Com and M.Com degree and has over 12 years of teaching experience in double entry bookkeeping, financial accounting, and business studies.
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